Saw this at bogleheads. Unfortunately, they locked the topic for unknown reasons. Sounds like a good thing to warm people of and discuss.
https://www.bogleheads.org/forum/viewtopic.php?f=2&t=264898
This is the bloomberg bizweek article they are referencing: Bloomberg - Are you a robot?
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Sounds really shady. Loan sharks and government is padding their pockets. Although I can’t say I am too surprised. Who takes a cash advance loan offer from fax machine spam?
The kind of person you really want a signed confession of judgement for since you’re likely to need it to collect!
Clark Howard talked about this in the past week, probably based on the Bloomberg article.
You know, I read this article (or another on the same subject), and came away wondering what these “victims” were hiding. I dont see any judge refusing to reconsider their ruling on non-payment when presented with evidence of payment, and definitely not if shown that their judgement was based on fraudulent documents.
The people in the story said things like “if a payment was missed, it must’ve been a computer error”. First problem is, if you know no payments were missed, you say that no payments were missed; it’s pretty disingenuous to criticize the lender for claiming you missed a payment and in the same breath acknowledge that you may have in fact missed a payment. Second, if a payment was missed, regardless of why, then you did in fact breech the loan terms and the fallout is exactly what you should’ve expected. Obviously I dont know any more than what was in the article, but the whole thing wreaks of people upset they were held to the terms of their loan and werent given a free do-over when they screwed up.
Apparently the N.Y. Marshalls who help collect these debts are making bank, one supposedly pulling in nearly $2M/year. Not bad for government work…
And this is surprising? I suspect a significant portion of the population feels this way. Weren’t mortgages modified because people couldn’t pay them?
The whole arrangement is “questionable”. I’d rather use another word there, but I hesitate to.
The lender says “we’ll loan you a boat load of money if you can meet the terms of this cash advance.” I’d take bets on whether they actually ever intended to loan them the 800k. Their entire business plan is based on getting a ton of interest and collecting everything at an accelerated rate. Otherwise, no lender would immediately file a claim when one payment was missed, but a subsequent one came through.
It’s also “questionable” behavior for a company to file a complaint against a debtor, then when that debtor calls to make sure their loan is in good standing, to incorrectly state that the loan is in fact in good standing.
An alternate title for this thread would be “Stay far away from anything that uses the words CASH ADVANCE.” But that would hopefully not be applicable to anyone on this forum.
Thanks for the heads-up on this practice but some elements in the story make you shake your head in disbelief of how naive/dumb people may be about financial decisions. Nothing excuse the fabrication of defaults, alteration of signed documents, and other illegal activities of those loan sharks but still…
“The rates sometimes exceeded 400 percent a year, and daily payments were required, but borrowers were desperate.” $36k with daily payments of $800 (roughly $11k in interest alone monthly). How could their business ever fail with such financial savvy indeed?
By the way, edit the title of the thread to specify that this only applies to business loans, not consumer loans.